Public Bill Committee

[Dame Maria Miller in the Chair]

Maria Miller: I have a few reminders. Members should switch all electronic devices to silent. No food or drink is permitted except the water provided. As ever, Hansard colleagues would be grateful for Members’ speaking notes.

Clause 165 - Appropriate court

Question proposed, That the clause stand part of the Bill.

Maria Miller: With this it will be convenient to discuss the following:
Clauses 166 to 168 stand part.
Clauses 170 and 171 stand part.

Kevin Hollinrake: It is a pleasure to see you in the Chair, Dame Maria. The clauses restate and update the Enterprise Act 2002. Clause 165 sets out which courts in the UK have jurisdiction to hear and determine applications for consumer protection orders. The globalised nature of modern business means that  a trader with UK consumers may well not have a place  of business or carry on business in any part of the UK. The clause provides that in those circumstances the relevant consumer’s place of domicile will determine which UK court has jurisdiction.
Clause 166 will extend the effect of consumer protection orders made by a court with jurisdiction in one part of the UK to other parts of the UK, as if the order were made in those other parts. That eliminates any jurisdictional gap within the UK and restates and consolidates relevant sections of the Enterprise Act 2002.
Clause 167 will allow evidence from previous court proceedings to be admitted in evidence for the purpose of proving that infringing conduct has occurred under this part. Convictions in the criminal courts and any relevant findings in the civil courts are admissible to prove that a person has engaged in an infringing practice or has been an accessory to such a practice.

Neil Coyle: I wonder whether the Minister could pinpoint where in the Bill’s impact assessment documents the estimates are for the number of cases that the Government expect under this legislation, the average time for a case to be heard and the amount that the Government will be resourcing courts?

Kevin Hollinrake: What a helpful question. I do not have those figures to hand, but I am happy to write to the hon. Member if we cannot find the information for him today. I am grateful for his intervention.
Clause 168 will give the court a discretionary power to make some or all of the requirements of a consumer protection order, including monetary penalties, binding on other members of the interconnected corporate group of the infringer. This power will prevent complex corporate structures from frustrating the ability of enforcement interventions to protect consumers and law-abiding traders. The exercise of the power is subject to two important conditions: first, that the infringing company meets the definition of a member of an interconnected corporate group at the time the order is made or at any time when the order is in force, and secondly that the court may make an order binding on other members of the same corporate group only if it considers it just, reasonable and proportionate. That will require an objective assessment on the facts of each case.
Clause 170 will apply where the court is considering an application for a consumer protection order made in relation to a suspected breach of unfair trading prohibitions. It will empower the court to compel traders to substantiate any factual claim made as part of their commercial practices. The burden of proving the accuracy of claims is on the trader. The clause is crucial to stopping unscrupulous traders making wild promises or getting the enforcer bogged down in disproving claims that should be backed up by evidence.
Clause 171 makes an exception to exempt the Crown from the monetary penalties that the court may impose under chapter 3 when it is engaging as a trader in commercial transactions with consumers.
I commend the clauses to the Committee.

Seema Malhotra: It is a pleasure to serve under your chairship today, Dame Maria. I thank the Minister for his opening remarks.
The Opposition recognise that clauses 165 to 167 are technical clauses. Clause 165 will provide the criteria to determine which courts within the UK have jurisdiction to hear and determine applications for consumer protection orders. It provides that where the respondent does not have a place of business in the UK, the appropriate court is where a relevant consumer is domiciled. This is a common-sense clause, and we support its inclusion in the Bill.
Clause 166 will have the effect of enabling a consumer protection order made in a court in England and Wales, Scotland or Northern Ireland to have effect in each of the constituent nations of the UK. This is a technical clause that the Opposition support.
Clause 167 will allow convictions in criminal courts and findings in civil courts to be admitted in evidence for the purpose of proving that infringing conduct has occurred. The explanatory notes confirm that it will still be necessary to prove that the conduct harmed the collective interests of consumers.
We recognise that these technical clauses are important for the implementation and operation of the new consumer protection regime enacted by this part of the Bill. We therefore support their inclusion.
My hon. Friend the Member for Bermondsey and Old Southwark made a point about case numbers and court resourcing. We expect demand on the courts  to increase. The last thing that the Minister will want to see is the effective implementation of the regime, or confidence in it, being undermined because the courts cannot take on cases at speed when they might need to do so. I would welcome the Minister’s response on the issue of court capacity, support and resources.
Clause 168 will introduce provisions such that when a court makes a consumer protection order against a corporate body that is or becomes a member of a group of interconnected bodies corporate, the court has a discretionary power to direct that the order is binding upon one or more other members of the same corporate group. Subsection (6) defines two or more bodies corporate as interconnected bodies corporate
“if one of them is a subsidiary of the other, or…if both of them are subsidiaries of the same body corporate.”
Under the clause, a court would be able to make part or all of the order binding on other members of the group where the court considers it just, reasonable and proportionate to do so. The explanatory notes state that when considering whether to extend an order to another group member, the court might take into consideration whether the other member was the brains behind or benefited from the infringement, and whether the extension would help to ensure that financial penalties are paid.
Clause 168 will provide a more robust consumer enforcement regime, helping to prevent companies from restructuring to avoid liabilities and ensuring that significant deterrents are in place to prevent companies from infringing regulations of the new regime. We support the clause.
Clause 169, “Enhanced consumer measures: private designated enforcers”, sets out two conditions that must be met before enhanced consumer measures can be included in an undertaking either given to a private designated enforcer or given through the court via an application from a private enforcer.
The first condition
“is that the private designated enforcer is specified…in regulations made by the Secretary of State”
to act as a private enforcer. In our debates on clauses 143 and 144, I raised questions with the Minister’s colleague the hon. Member for Sutton and Cheam about the process of becoming a private designated enforcer. However, I would welcome further clarification from the Minister of how he envisages the process of a private enforcer working in practice. I am not very clear on whether that is through an application or via the discretion of the Secretary of State; it would be helpful and important to clarify that point to ensure that clause 169 is effective in enabling private designated enforcers, so we can be sure we know who they may be in future, and to include enhanced consumer measures in an undertaking.
The second condition, rightly,
“is that the enhanced consumer measures do not directly benefit the private designated enforcer or an associated undertaking.”
Will the Minister clarify some matters in relation to subsections (7) and (8)? Private designated enforcers must have regard to any relevant advice or guidance given by a primary authority. Could he perhaps illustrate that with an example of a primary authority within the meaning of subsection (7)(a) and a situation in which that may occur, so we are clear about the intentions for how the clause will be used?
Clause 170, “Substantiation of claims”, will enable the court to require evidence from traders to substantiate the factual claims used in their commercial practices with consumers when an application for a consumer protection order has been made against those traders. Under subsection (3), it is for the court to decide whether any evidence provided is adequate. If the court decides that it is not, or if no evidence is produced, the court can determine that the claim is inaccurate. This provision will ensure that the burden of proof regarding the accuracy of claims rests with the trader. In effect, claims must be based on evidence that can be verified by the court.
The explanatory notes specifically mention environmental claims—sometimes referred to as greenwashing—and claims about the health benefits of goods as examples where substantiation of claims may be required. Greenwashing generally refers to claims made about the positive impact of a product or service on the environment that could be seen as misleading or untrue. This is a growing area of concern under competition law. We have not tabled amendments at this point, but it is an important area in this and other legislation.
The Government and the EU have announced proposals to introduce new legal instruments to address alleged greenwashing. Ultimately, legislation to regulate claims that businesses in Europe can make in their consumer communications would come into force, as is already the case in France. A European Commission study in 2020 highlighted that 53.3% of examined environmental claims in the EU were found to be vague, misleading or unfounded, and 40% were unsubstantiated. This policy issue has highlighted the absence of common rules for companies making voluntary green claims, which, in a sense, leads to greenwashing. The uneven playing field in the market is to the disadvantage of genuinely sustainable companies. It also has an impact on how effectively consumers can make their purchase decisions.
EU proposals for the green claims directive outline that before companies communicate any of the covered types of green claims to consumers, any such claims would need to be independently verified and proven with scientific evidence. As part of scientific analysis, companies would identify the environmental impacts that are actually relevant to their products, as well as any possible trade-offs, in order to give a full and accurate picture.
There have been calls to review how comparisons between products and organisations should be made, based on equivalent information and data. There have also been calls to look at regulating environmental labels, outlining the fact that there are over 230 different labels, which, according to evidence, leads to consumer confusion and distrust. The Competition and Markets Authority published the green claims code in September 2021. It has also been investigating the sustainability claims of major household brands, and how products and services claiming to be eco-friendly are marketed.
This is a newer area, and as we move towards achieving our net zero targets it is going to become increasingly important to how the marketplace is defined. It is important to know and be ahead of where consumers might be being misled. Some of the work in the run-up to COP26 and since has been welcome, but we cannot take our foot off the accelerator.
Clause 170 is welcome. It seeks to ensure that the burden of proof is on the trader, as opposed to on the enforcer, which in practice should lead to greater protection for consumers and more robust defences against rogue traders. The vital question, however, is about how that sits alongside ensuring that our codes and regulations are sufficiently in place and that there are trusted communications to consumers.
The explanatory notes on clause 170 highlight that, while evidence should be verifiable by the courts, there is
“no equivalent obligation for the trader to provide documentation or other supporting evidence to consumers.”
Will the Minister clarify the Government’s policy on communications and the evidencing of standards and of claims to consumers, so that we head this issue off at the pass and so that we do not see cases in court that would not have got there if the prevention of unsubstantiated claims to consumers had been more robust?
Clause 171 confirms that the Crown, meaning the state, is bound by provisions in this chapter concerning consumer protection orders and undertakings. It also states that the Crown is not liable for any monetary penalty granted under the chapter. My inquiry is general, to understand the effect of the clause more clearly: will the Minister expand on examples of where the Crown may be bound by these provisions? It might be helpful to understand what is covered. Is it simply procedural, or is there content that we should be aware of? I would welcome the Minister’s clarification of these clauses.

Neil Coyle: I did not intend to speak, but I want to press the Minister on the approach that the Government are choosing to adopt in this group of clauses. What the Bill intends is welcome, as we have heard from witnesses and from elsewhere. Fundamentally, customers want quick redress, and businesses want justice and the removal of counterfeit or fake products that undermine their licences and appropriate trading. The Government’s approach—specifically in these clauses, heading for the courts—ignores the backlog that my hon. Friend the Member for Feltham and Heston has spoken about.
On Tuesday, we heard from the Minister for London that the Government did not have an agreement with Citizens Advice, or funding set aside for Citizens Advice, to support people to take a case through the courts.  I was promised some further information that has not arrived yet; I do not know whether it is in the snail mail or the Minister’s crayons ran out or something, but I hope it is coming.
As has been raised this morning, there is no information yet from the Government about their expectations for how many cases will be taken to court, how that will have an impact on the backlog, or what the cost will be to Government or individuals. The reason people will end up at Citizens Advice is that they are seeking legal information; Citizens Advice needs to be resourced to support people and to take cases. In connection with this group of clauses, we are not hearing what the Government intend to do to support cases that need to be taken.
And, of course, it takes time. In the time that someone is going through the process—potentially for months and months—products that are dangerous to individuals  might still be online. I am keen to hear from the Minister what will happen in the interim. What is to stop sellers and online marketplaces continuing to retail products that are dangerous to individuals or are counterfeit goods?
We will come to this next week, I think, but there is an alternative: the take-down power suggested by trading standards. With what is out there currently and what the Bill intends, we hear lots of analogies about the wild west, but it all feels a bit as if, instead of getting a Clint Eastwood figure to address the problems, we are getting a Deputy Dawg. Will the Minister say why the Government chose a costly court process—costly to Government and to individuals, as well as more time-consuming—rather than a specific measure that allows for a body already set out in a schedule to require the removal of information on products that are known to be faulty or counterfeit?

Kevin Hollinrake: On resourcing, the hon. Members for Feltham and Heston and for Bermondsey and Old Southwark were both right to mention the courts backlog. If my ministerial colleague, the Under-Secretary of State for Science, Innovation and Technology, the hon. Member for Sutton and Cheam, committed to write to the hon. Gentleman, I am sure that he will do that. It has not come across my desk yet, but there will be no delay when it does, short of ensuring that it answers the hon. Gentleman’s questions.
One thing to say about that, of course, is that the fact that we are putting in place a direct enforcement regime may well ease the pressures on the courts, because the CMA can take action without recourse to them. That should help by ensuring that not all such cases need to go to court.
On private enforcement, and how it would work, it could happen on the basis of an enforcer’s application, or on the Secretary of State’s initiative after consultation with a proposed enforcer. I think that the only private designated enforcer currently is Which?. I hope that that answers the question of the hon. Member for Feltham and Heston.
On the hon. Lady’s points about a primary authority, a primary authority can be a local authority, it could provide information about the business to enforcing authorities and help direct their efforts to improve regulatory efficiencies.
On greenwashing, she is right that the CMA is conducting an investigation into ASOS, Boohoo and Asda. We have the green claims code to try to ensure that there are standards in this area. The Government policy in this area, of course, is that misleading information is already a breach of existing consumer laws. The CMA has issued guidance to help businesses to comply with existing obligations in that green claims code.
The hon. Member for Bermondsey and Old Southwark asked about product safety. Rather than Deputy Dawg, I would use the analogy of Clint Eastwood in “The Good, the Bad and the Ugly”. We are working very hard on this, in terms of product safety. The Office for Product Safety and Standards, which I work very closely with, comes under my remit. It has put a huge amount of time and effort into market surveillance and ensuring that products online are safe.
We have real concerns over whether that is the case, of course, and we recently met with Amazon to discuss that issue. We have also met with eBay, Wish and other  platforms to point out their responsibilities. As far as we are concerned, as distributors they have responsibilities to proactively remove unsafe content. As the hon. Gentleman knows—I have said this to him before—we intend to look at that again through the product safety review, which we are about to announce, and that should clarify those responsibilities and ensure that unsafe products do not hit the marketplace in the first place.
I take the points on takedown powers very seriously, and I heard the same evidence from trading standards that the hon. Gentleman heard. We are keen to look at that matter and, again, it might involve another layer of enforcement so that we can then try to prevent those unsafe products from hitting marketplaces across the UK. Trading standards has the capacity to do that for individual websites, but I understand that there are wider concerns regarding other areas of online activity that we are keen to address.

Seema Malhotra: I thank the Minister for his comments relating to the calls from trading standards to strengthen the legislation, which I also support. Could the Minister perhaps clarify a couple of points?
On greenwashing, my point was about how robust our regime will be in making sure that the green claims code, and how that is implemented, will be sufficient to ensure more compliance—either with the code or with any other ways in which we are going to be taking forward legislation on this—so that we do not have to do a lot more by way of enforcement. That would clearly not be the best outcome in the long term for consumers. Having the information up front and ensuring that labelling and other matters are much more robust is better than having challenges later on, with the associated costs of taking things through the courts. My question was more about how this all sits together, and whether the Government have an overall strategy, which I think is quite important.
Finally, on the product safety review, it has been “about to be published shortly” for quite a long time. Is it coming shortly?

Kevin Hollinrake: Yes, it is coming shortly.
Turning to greenwashing, we take the matter very seriously, and there are two ways to deal with it. We can do ex ante regulation, which involves building a huge bureaucracy around a certain system and people checking everything, or we can put in an ex post regulation deterrent regime, which involves a code or set of standards that companies should adhere to, and then an enforcement regime that takes breaches of the code very seriously and applies penalties to organisations that do not meet the standards. The latter is a more efficient and effective way to regulate, and that is the approach we are taking. That should prove a deterrent and prevent people from doing the wrong thing in the first place.

Question put and agreed to.

Clause 165 accordingly ordered to stand part of the Bill.

Clauses 166 to 171 ordered to stand part of the Bill.

Clause 172 - Power of CMA to investigate suspected infringements

Question proposed, That the clause stand part of the Bill.

Maria Miller: With this it will be convenient to discuss that clauses 173 to 176 stand part.

Kevin Hollinrake: Clauses 172 to 176 set out a range of new enforcement powers for the CMA to determine whether certain consumer laws have been breached and, if so, to direct compliance and impose remedies and penalties. These powers correspond to powers available to the civil courts under chapter 3 of this part of the Bill to make consumer protection orders, but are available in relation to certain consumer protection laws only.
Clause 172 gives power to the CMA to conduct an investigation into suspected infringements under its direct enforcement regime. This acts as a trigger for the use of the CMA’s direct enforcement powers under chapter 4 of part 3. To use its direct enforcement powers, the CMA must have reasonable grounds for suspecting an infringing practice has occurred, is occurring, or is likely to occur.
Clause 173 allows the CMA to issue provisional infringement notices to enforcement subjects. It provides that enforcement subjects have a right to know the claims against them and be given an opportunity to make representations in a meaningful manner before a final decision is taken by the CMA. That ensures that the direct enforcement process is fair, with appropriate safeguards to protect the legitimate rights of the enforcement subject.
Clause 174 is fundamental to the direct enforcement regime and gives the CMA a discretionary power to issue a final infringement notice. To do so, the CMA must be satisfied that the infringing conduct has occurred, is occurring or is likely to occur. As well as giving directions to prevent or stop infringing practices or require enhanced consumer measures, a final infringement order may impose monetary penalties. That may be up to £300,000 or, if it is higher, 10% of the subject’s total turnover, in relation to past or ongoing infringing conduct.
Clause 175 empowers the CMA to include enhanced consumer measures as part of a final infringement notice if it considers them to be just, reasonable and proportionate.
Clause 176 empowers the CMA to issue an online interface notice to avoid the risk of serious harm to the collective interest of consumers. To exercise that power, the CMA needs to be satisfied that no other tools under the direct enforcement regime, nor the court’s power to make interim online interface orders, would be wholly effective.
An online interface notice may be given to the infringer or to any relevant third party. For example, an online interface notice may require a third party to remove, modify or restrict access to content that can be found on an online interface, such as a website. An online interface notice may be given to an overseas third party if the third party satisfies the UK connection test at subsection (3)(c). This clause therefore takes into account the global nature of online commerce, but does not give the CMA unfettered extraterritorial jurisdiction. I hope hon. Members will agree that it is appropriate that this provision has cross-border reach to websites, platforms and applications that direct their business activities to consumers in the United Kingdom.

Seema Malhotra: Clause 172 introduces provisions empowering the CMA to begin an investigation where it has reasonable grounds for expecting that a person has  engaged, is engaging or is likely to engage in a commercial practice that would be considered a relevant infringement. That power acts as a trigger for the use of the CMA’s direct enforcement powers. Under subsection (3), the CMA would be able to publish a notice of investigations setting out what and whom it is investigating and indicating the investigation timetable. If, after giving such a notice, the CMA decides to close the investigation, it would be required to publish a notice of termination.
The clause is welcome. It is a vital part of the new consumer protection regime, and we need to ensure is properly enforced. While I am glad the provisions are being introduced, I note again that it will be a long time before they are in operation. It is not until 2025 that some of the provisions come into force.
It does not appear that publishing of the notice of investigation would be mandatory in all cases. Are there any times or examples of when a notice should not be published? If so, could the Minister share those with the Committee?
Under clause 173, the CMA would be empowered to give an enforcement subject a provisional infringement notice where the CMA has started an investigation under clause 172, which continues. The provisional infringement notice would need to contain certain information, including the grounds on which it is given and the enforcement subject’s acts or omissions that give rise to the CMA belief that there has been an infringement. It must also include the CMA’s proposed directions specifying the conduct required to ensure compliance. If the proposed directions include enhanced consumer measures considered by the CMA to be just, reasonable and proportionate, the notice will also need to state that and include details of those measures.
The notice must also include the process for the enforcement subject to make representations to the CMA about the notice, including the means by which and the time by which representations must be made by the enforcement subject. That must also include a hearing if the enforcement subject decides to make an oral representation and, if the CMA is considering monetary penalties, the detail of that penalty.
This is an important clause in enabling co-operation through the enforcement regime, but I would welcome clarification in a few areas. Subsection (3) sets out how the CMA may give the respondent a notice. Are there any scenarios in which the CMA will not need to give the respondent an infringement notice? If not, is this intended to be a power rather than a duty?
Subsection (4) states that the infringement notice must specify the time by which representations must be made. Does the Minister have in mind an expected time range for those representations to be made? I am sure that there is an intention that this all happens as quickly as possible, but there is no specification or guidance as to what some of the timelines might be. It would be helpful to understand the Minister’s intentions on that further.
Clause 174 grants the CMA a discretionary power to issue a final infringement notice to the enforcement subject. In deciding whether to issue a final infringement notice, the CMA will be required, under the clause, to consider whether an undertaking has been given and, if  so, whether the enforcement subject has complied with its terms. A final infringement notice may impose on the enforcement subject a requirement to comply with such directions as the CMA considers appropriate to rectify an infringement and achieve compliance, and/or a requirement to pay a monetary penalty. Subsection (6) sets out that the monetary penalty must be a fixed amount not exceeding £300,000—I think that was described in earlier discussions as the middle of the pack—or, if higher, 10% of the total value of the enforcement subject’s turnover.
Under subsection (8), a final infringement notice could require the enforcement subject to publish the notice and a corrective statement. I ask the Minister—again, in the interests of transparency—why this subsection says “may require” rather than “will require”. I ask in the interests of consistency and transparency for consumers, so I would be grateful for the Minister’s response.
Clause 175 empowers the CMA to include in a final infringement notice enhanced consumer measures that it considers to be just, reasonable and proportionate. This clause is welcomed by the Opposition as an important part of the consumer protection regime.
Under clause 176, the CMA will be able to issue an online interface notice to any person whom the CMA believes has engaged, is engaging or is likely to engage in a relevant infringement. This includes third parties with a connection to the UK—for example, UK nationals and residents, UK-established businesses, and businesses carrying on business in the UK or targeting UK consumers. The purpose of this notice would be to prevent serious harm to consumers where there has been or is likely to be an infringing practice. In effect, the notice would force the infringer or any third party to take down content that is harmful to consumers. Subsection (4) sets out what the directions could include: removing content from, or modifying content on, an online interface; disabling or restricting access to an online interface; displaying a warning to consumers accessing an online interface; and deleting a fully qualified domain name.
Use of those powers has been described as a last resort. Will the Minister clarify whether this would therefore be after a period of notices and whether there is a timeline in which it might be undertaken? If a business was not responsive, would the Minister expect relatively quick use of the powers in order to protect consumers and to deter any further consumer detriment? Also, is it the Minister’s intention that the powers are just for the CMA? Considering some of the discussion that we have been having in relation to trading standards, I wonder whether use of the powers may be open in the future to other enforcers.

Kevin Hollinrake: In terms of publication of a notice, I think that that is a judgment for the CMA. There may be public interest in making a notice public—for example, to inform traders or consumers about practices of concern. Why would it not publish a notice? Well, it might be, for example, that that might prejudice the CMA’s investigation, which is clearly not something that we would want to happen.
The hon. Lady asked about the timescale for response. That will be something that the CMA consults on, in terms of how the process will happen, and stakeholders will be able to input into that consultation. However, we expect clear timelines to be set for responses.
Why would the CMA not give an infringement notice? Well, it might be that it decides, for example, that another enforcer might be better placed to take forward enforcement in that area. Circumstances will vary widely from case to case, and the CMA will be the best judge of whether publication is desirable in any given situation.
What about other consumer enforcers? We believe that the CMA has a leading and co-ordinating role in both the public enforcement of consumer law and in tackling market-wide practices that hinder consumer choice. The new direct enforcement model will enable the CMA to act faster and take on more cases on behalf of the public, resulting in an estimated further tens of millions—or potentially hundreds of millions—of pounds of direct benefit to consumers. Improving the speed and responsiveness of the CMA’s interventions has the greatest potential to safeguard the wider interests of consumers right across the economy.

Question put and agreed to.

Clause 172 accordingly ordered to stand part of the Bill.

Clauses 173 to 176 ordered to stand part of the Bill.

Clause 177 - Undertakings

Kevin Hollinrake: I beg to move amendment 60, in clause 177, page 118, line 12, at end insert—
“(2A) Subsections
(1) to (6) of section 156 (inclusion of enhanced consumer measures in
undertakings) apply to an undertaking under this section as they apply
to an undertaking under section
155(2).”
This amendment ensures that requirements imposed by undertakings given under clause 177 may include the taking of enhanced consumer measures (as defined by clause 213).

Maria Miller: With this it will be convenient to discuss the following:
Clauses 177 to 180 stand part.
Government amendment 61.
Clauses 181 and 182 stand part.

Kevin Hollinrake: Government amendments 60 and 61, and clauses 177 to 182, govern the acceptance and enforcement of undertakings by the CMA under its direct enforcement regime. Clause 177 provides a framework for the CMA to accept an undertaking as an alternative to giving a final infringement notice or online interface notice. The CMA may not accept undertakings unless they include provisions that effectively stop the conduct of concern. The more co-operative nature of the undertakings procedure can lead to faster resolution of consumer protection concerns and shorten the enforcement process.
Government amendment 60 adds a provision to clause 177 empowering the CMA to include enhanced consumer measures—or ECMs—in undertakings that it accepts under its direct enforcement powers. The power to add ECMs to undertakings is available to the CMA, and other enforcers in the court-based regime, under clauses 155(3) and 156 of the Bill. The inclusion of ECMs in undertakings has been a valuable part of the toolkit available under the court-based regime. The  amendment makes it expressly clear that the power already available in the court-based regime is also available to the CMA under its direct enforcement powers under chapter 4 of part 3.
Clause 178 prevents the CMA, once it accepts an undertaking under clause 177, from giving a final infringement notice or an online interface notice to the same enforcement subject in relation to the same matter. The CMA can still give those notices if they relate to matters or persons not addressed in the undertaking, if circumstances have materially changed since the undertaking was accepted, or if the CMA suspects the undertaking has been breached or was based on false or misleading information.
Clause 179 sets out the process that the CMA must follow to make a material variation or to release a person from an undertaking once it has been accepted. The clause is important for procedural fairness, and ensures that the CMA cannot significantly modify or release persons from undertakings without giving notice to the other party and considering their views. Clause 180 allows the CMA to start a process to enforce compliance if it has reasonable grounds to believe that a person has breached at least one term of an undertaking. As with the majority of the CMA’s direct enforcement powers under this part, any assertion or sanctions for wrongdoing must be preceded by a provisional notice. That includes, for example, proposed directions and proposed penalties, and an invitation to make representations.
Government amendment 61 adds a provision to clause 181 to require that the CMA must specify in a final breach of undertakings enforcement notice the main details of the appeal rights available to the enforcement subject. The aim of that provision is to ensure that the right to appeal CMA decisions is clear. Clause 181 gives the CMA a discretionary power to issue a final breach of undertakings enforcement notice. Such a notice can be given only after the CMA has issued a provisional breach of undertakings enforcement notice and has considered any representations made.

Neil Coyle: Within clause 181 there is the option for someone who is potentially identified as selling rogue or dangerous products to use a reasonable excuse. Can the Minister better define what a reasonable excuse might be? Companies and individuals could choose to prolong the timeframe involved in order to sell more goods that are hooky while the process is followed.

Kevin Hollinrake: As I said earlier, there are measures to ensure that any representations are given earnestly. A reasonable excuse might be that the trader was not aware of some of the difficulties surrounding the product. There may be various circumstances. When implementing and enforcing legislation, we always try to ensure that the CMA can apply discretion in different circumstances where an honest mistake has occurred.

Neil Coyle: To be clear, I am not looking for a list of what companies or individuals might use as an excuse for selling dangerous goods; I wondered whether the Minister would set out the timeframe, as the clause, and  associated clauses, are not clear about how long companies and individuals get to provide information or remove dangerous products. What is there to prevent someone from saying, for example, “We have this product on our online marketplace, but it is manufactured in another country. We have been trying to contact the manufacturer, and it has taken some time to identify the specific individual.”? In that time, of course, the individual could have sold more counterfeit and dangerous goods, or have changed their email and other addresses in order to avoid the removal of their products online.

Kevin Hollinrake: We are now getting into the weeds of this. We have similar views about online marketplaces and their responsibilities. In our view, their responsibility as a distributor requires them to ensure that products are safe before they are placed on the marketplace in the first place. There should be no excuse for a distributor not checking the validity of a standards marking, for example. That is a responsibility that I have discussed with various platforms. We want to get to the position where products are verified before they enter the marketplace, through checks and balances. Rather than working reactively, platforms should work proactively in such instances, but part of that crosses over into work that we are doing in the product safety review, which we have discussed previously and will, I am sure, discuss again.
If the CMA is satisfied that a breach occurred without a reasonable excuse it can impose a penalty. That ensures that there are meaningful consequences to breaching an undertaking, to deter unscrupulous traders. Clause 182 states the types of penalties and the maximum penalty amounts that can be imposed by the CMA through a final breach of undertakings enforcement notice. The penalty imposed can be the higher of a fixed amount up to £150,000 or 5% of total turnover. A daily rate penalty can be up to £15,000 or 5% of the total value of the daily turnover, whichever is higher, accruing over the days in which non-compliance continues. Both a fixed amount and a daily rate penalty may be imposed, but they must not exceed the fixed amounts that I have just referenced. I hope that hon. Members will support Government amendment 60, and clauses 177 to 182 standing part of the Bill.

Seema Malhotra: The Opposition support the inclusion of clause 177. We welcome any measures that enable co-operation between enforcement bodies and subjects. I will, however, ask the Minister about timescales. The legislation as it stands contains little in the way of specifying timescales. The Minister might tell me again that this might be relevant for the consultation that the CMA undertakes on the process, but I think this will end up being relevant also for the resources that are in place, the expectations of how quickly all the procedures will be able to operate, and certainly how long it could take during the course of an initial infringement notice and a final infringement notice to reach an undertaking.
Although the inclusion of these provisions is necessary to make the regime a co-operative one, it is important that their inclusion in the Bill does not lead to unnecessary delay by enforcement subjects who might have no genuine  intention to reach a commitment with the CMA. I would welcome the Minister explaining how he believes that will operate effectively.
Government amendment 60 ensures that the requirements imposed by undertakings given under clause 177 may include the taking of enhanced consumer measures, as defined by clause 213. We welcome this amendment, which should bring further consistency in the enforcement regime.
Clause 178 is consequential on clause 177. It prevents the CMA, once it has accepted an undertaking under clause 177, from giving a final infringement notice or an online interface notice to the same enforcement subject in relation to the same matter. The explanatory notes explain that the underlying policy intent is that undertakings are an alternative to final infringement or online interface notices and therefore the effect is that a person cannot be subjected to multiple enforcement resolutions of the same matter. Subsection (3) provides the necessary flexibility for the CMA. The CMA can still give a final infringement notice or an online interface notice to the extent that it deals with different matters from the undertaking. We welcome the clause.
Clause 179 sets out the process to be followed when the CMA needs to change or end an undertaking. Where the CMA proposes to accept a material variation of an undertaking or to discharge an undertaking, under this clause the CMA would be required to first give notice to the enforcement subject. If, after considering any representations made in accordance with the notice the CMA decides to take the proposed action, it would have to give further notice to the enforcement subject of that decision. We think this is an important clause.
Under clause 180, the CMA would be able to give a provisional breach of the undertakings enforcement notice where it has reasonable grounds to believe that the enforcement subject has failed to comply with one or more of the terms of the undertaking. It also sets out what the provisional breach of an enforcement notice must include. We welcome this clause as an important provision. It is important for the CMA to be clear on its intentions, for the enforcement subject to have no means of saying it was a misunderstanding, and for transparency for consumers.
Clause 181 introduces provisions enabling the CMA to issue a final breach of undertakings enforcement notice in circumstances where the deadline for the enforcement subject to make representations to the CMA in accordance with the first notice has expired, and if, after considering representations, the CMA is satisfied that the enforcement subject has committed an infringement. The clause also lists what must be included in the enforcement notice.
Subsection (4) lays out the threshold for a monetary penalty. It states that the penalty
“may be imposed only if the CMA is satisfied that the failure in question is without reasonable excuse.”
Like my hon. Friend the Member for Bermondsey and Old Southwark, I want the Minister to expand on the word “reasonable”. Will further definition be required? Does he think there will be some case law or further guidance? This is an important matter, because it can lead to questions about whether the CMA’s interpretation of “reasonable” is reasonable. We do not want to go down that route; we want a clear regime that provides  less wriggle room for enforcement subjects that have no intention of complying and will use any excuse not to do so. I hope the Minister will look at that further and will give the House confidence that the apparent vagueness of the term will not enable companies that are in breach of their undertaking to escape the monetary penalties that, under the regime, they ought to pay.
Government amendment 61 requires that the information contained in a final breach of undertakings enforcement notice includes information about rights of appeal. We welcome it as a common-sense addition to what must be included in the final breach notice.
Clause 182 sets out the maximum monetary penalty that can be imposed for a breach of undertakings notice under clause 181. It amounts to a fixed amount of £150,000 or, if higher, 5% of the total value of the enforcement subject’s turnover. In the case of a daily rate, it is £15,000 or, if higher, 5% of the total value of the daily turnover of the enforcement subject. We have debated that previously. I assume that that amount relates to this being an enforcement penalty. Will the CMA continue to be the only body that has such fining powers? Will other enforcers, such as trading standards, be able to pursue penalties only through other routes?  I would appreciate clarification from the Minister on that.

Kevin Hollinrake: The Opposition make a reasonable point about the reasonable excuse. We have left the threshold pretty broad to reflect the range of situations that could prevent compliance. We feel that a closed list on the face of the Bill would bind the CMA’s hands and make the measure less effective. As hon. Members know, the Bill requires the CMA, in the guidance on exercising its direct enforcement functions that it produces under clause 205, to provide information about the factors it takes into account in determining whether a reasonable excuse exists, and that will include examples.
The hon. Lady asked how soon after a provisional notice the CMA will issue a final breach of undertakings enforcement notice. She pre-empted my response to that: it will, again, be subject to consultation. Of course, it is at the discretion of the CMA. The CMA will set out its approach to determining the period within which representations have to be made in forthcoming guidance, preceded by the public consultation.

Seema Malhotra: I will take what the Minister said on reasonableness, and we will have a look at it. We may return to this matter, in order to ensure that there is not a gap between what an enforcement subject could argue and what the CMA intends, but I thank him for his response.

Kevin Hollinrake: It is perfectly reasonable that we have that debate, but we will do so we when we discuss clause 205. It is right that the Opposition challenge us and the CMA to ensure that the guidance is clear, and covers all bases.

Amendment 60 agreed to.

Clause 177, as amended, ordered to stand part of the Bill.

Clauses 178 to 180 ordered to stand part of the Bill.

Clause 181 - Final breach of undertakings enforcement notice

Amendment made: 61, in clause 181, page 121, line 28, at end insert—
“(e) state that the
respondent has a right to appeal against the notice and the main
details of that right (so far as not stated in accordance with
paragraph (d)).”—
This amendment requires that the information contained in a final breach of undertakings enforcement notice includes information about rights of appeal.

Clause 181, as amended, ordered to stand part of the Bill.

Clause 182 ordered to stand part of the Bill.

Clause 183 - Provisional breach of directions enforcement notice

Question proposed, That the clause stand part of the Bill.

Maria Miller: With this it will be convenient to discuss that clauses 184 to 188 stand part.

Kevin Hollinrake: Clauses 183 to 188 principally deal with the enforcement of directions imposed by the CMA in its final infringement notices, online interface notices, and final breach of undertakings enforcement notices. Clause 183 empowers the CMA to enforce compliance with enforcement directions by giving a provisional breach of directions enforcement notice. That allows the enforcement subject to know the case against them and to make representations.
Clause 184 allows the CMA to give a final breach of directions enforcement notice, if it is satisfied that a direction has been fully or partially breached without a reasonable excuse. The notice must follow a provisional breach of directions enforcement notice and can be given only after the period to make representations has expired and the CMA has considered any representations received. Given the seriousness of the situation and the late stage in the process of enforcing compliance with consumer protection law, the Bill sets out that the CMA will impose a monetary penalty each time it gives a final notice under the clause.
Clause 185 provides for the types of penalties and the maximum penalty amounts that can be imposed by the CMA through a final breach of directions enforcement notice. The total penalty amount can be a fixed amount up to £150,000 or 5% of total turnover, whichever is higher. It can also be a daily rate penalty up to £15,000 or 5% of the total value of the daily turnover, whichever is higher, and accruing over the days while non-compliance continues. It can also be a combination of both, but that must not exceed the maximum penalty amounts in both separate cases.
Clause 186 gives the CMA an alternative means of enforcing compliance with directions given in final infringement notices, online interface notices and final breach of undertakings enforcement notices by enabling applications to court for an order to require compliance. It also provides a backstop power for the CMA to apply  for a court order where it considers a person has failed to comply with a direction given in a final breach of directions enforcement notice.
Clause 187 gives the CMA the power to require evidence from the enforcement subject to substantiate factual claims made as part of its commercial practices under investigation. This applies where the CMA gives a provisional notice concerning a suspected breach of the unfair trading prohibitions in chapter 1 of part 4 of the Bill. By placing the burden of proving the accuracy of claims on the trader, the clause is crucial in stopping unscrupulous traders from spreading wild promises or getting the CMA bogged down in disproving claims that should be backed up by evidence.
Clause 188 sets out the process that the CMA must follow for proposing to materially vary or revoke any directions. The clause gives flexibility to the CMA to direct compliance while requiring it to provide a sufficient notice period and clear information to guarantee fairness to the person involved.

Seema Malhotra: Clause 183, in conjunction with clause 184, sets out the CMA’s powers to enforce compliance with enforcement directions. It introduces provisions enabling the CMA to issue a provisional breach of directions enforcement notice where it has reasonable grounds to believe that the enforcement subject has without reasonable excuse failed to comply with the direction. We support the clause.
Under clause 184, the CMA would be able issue a final breach of directions enforcement notice requiring the payment of a monetary penalty upon completion of the process laid out in the clause. We support this clause. Clause 185 is consequential on clause 184 and sets out the maximum monetary penalty that the CMA may impose for a breach under clause 184. Again, we support the clause.
Clause 186 provides the CMA with the power to apply to an appropriate court when a person or company has failed to comply with a direction given under clause 184. Under the clause, the CMA would be able to apply to the court for an enforcement order, an interim enforcement order, an online interface order or an interim online interface order. That would enable the court to act in respect of any practice or conduct that would amount to a “relevant infringement” by making a consumer protection order in addition to or instead of making an order in respect of the breach of directions. We welcome this clause, as it provides a necessary backstop for the CMA to enforce its judgments and penalties.
Clause 187 would enable the CMA to require evidence from traders substantiating the factual claims used in their commercial practices with consumers, which are at issue in a provisional notice involving alleged contravention of the new consumer protection regime. Where the CMA has issued a provisional notice to an enforcement subject and the enforcement subject makes representations to the CMA in response to that notice, the CMA may require the enforcement subject to provide evidence as to the accuracy of any claim made. For the reasons that we debated earlier, we welcome this clause and this power as they will enable the CMA to carry out its functions more effectively on behalf of consumers.
Clause 188 introduces provisions enabling the CMA to make a material variation of, or to revoke, directions that it has given under other clauses as specified. We support the inclusion of clause 188 in the Bill. I hope that what the clause provides for will be able to be done at speed and that we do not see any delays in the use of these powers where needed.

Question put and agreed to.

Clause 183 accordingly ordered to stand part of the Bill.

Clauses 184 to 188 ordered to stand part of the Bill.

Clause 189 - Provisional false information enforcement notice

Question proposed, That the clause stand part of the Bill.

Maria Miller: With this it will be convenient to discuss clause 190 stand part.

Kevin Hollinrake: I notice that England just bowled Australia out, which is very good news.

Maria Miller: Let us stick to the important information.

Kevin Hollinrake: Of course—sorry, Dame Maria.
Clauses 189 and 190 empower the CMA to give a provisional false information enforcement notice, followed by a final notice imposing a monetary penalty of up to £30,000 or, if higher, 1% of total turnover. They allow the CMA to enforce against, and penalise, the provision of materially false or misleading information to the CMA without reasonable excuse.

Seema Malhotra: Clause 189 introduces provisions granting the CMA a discretionary power to issue a provisional false information enforcement notice if it has reasonable grounds to believe that a person has provided to the CMA materially false or misleading information. It also lists what would be included in this enforcement notice. It would obviously be a really serious matter if false or misleading information was provided to the CMA. We therefore support this clause.
Clause 190 enables the CMA to issue a final false information enforcement notice. This clause is consequent on clause 189 and we therefore welcome its inclusion in the Bill. Clause 190(4) sets out the maximum monetary penalty for a false information infringement. It is important that there is a sufficient deterrent and also the ability for significant enforcement where it is found that false information has been provided to the CMA and that has been proven.

Question put and agreed to.

Clause 189 accordingly ordered to stand part of the Bill.

Clause 190 ordered to stand part of the Bill.

Clause 191 - Statement of policy in relation to monetary penalties

Question proposed, That the clause stand part of the Bill.

Maria Miller: With this it will be convenient to discuss clauses 192 to 199 stand part.

Kevin Hollinrake: Clauses 191 to 194 cover appeal rights and other requirements for the CMA that will ensure that it exercises its direct enforcement powers proportionately and transparently. I will also discuss clauses 195 to 199, which make supplementary provision for the monetary penalties imposable by the CMA and the civil courts under part 3 of the Bill.
Clause 191 requires the CMA to produce and publish a statement of policy relating to its exercise of powers to impose monetary penalties. The statement of policy must cover the considerations relevant to whether to impose a penalty and the nature and amount of the penalty. When preparing or revising that statement, the CMA must consult the Secretary of State and other relevant stakeholders. The statement, or its revised form, cannot be published without the Secretary of State’s approval. Finally, the CMA will be required to have regard to the most recent published statement approved by the Secretary of State when deciding whether to impose penalties under this chapter, as well as deciding the penalty’s nature and amount.
Clause 192 gives the CMA a discretionary power to make some or all the requirements of a final notice binding on other members of the same interconnected corporate group as the infringer. That prevents complex corporate structures frustrating the ability of enforcement interventions to protect consumers and law-abiding traders.
The exercise of that power is subject to two important conditions. First, the infringing company must meet the definition of being a member of an interconnected corporate group at the time the final notice is given or at any time when the requirements under the notice are in force. Secondly, the CMA may only make the requirements of a final notice binding on other members of the same corporate group if it considers it just, reasonable and proportionate.
Clause 193 requires the CMA to do two things to assist with the monitoring and evaluation of the direct enforcement regime. First, the CMA must keep a record of undertakings it has accepted and directions it has given under the direct enforcement regime set out in this chapter. It must also keep a record of the reviews done of their effectiveness. Secondly, if requested by the Secretary of State, the CMA is required to prepare a report on the effectiveness of the undertakings and directions given, and the number and outcome of appeals. Such reports will support the Secretary of State to keep abreast of the outcomes of te CMA’s exercise of its direct enforcement functions.
Clause 194 provides for appeals to the court against certain direct enforcement decisions taken by the CMA. These appeals will be heard on the merits, meaning the appeal courts will have a broad jurisdiction to review  and uphold or change the CMA’s decisions. The clause allows for appeals on the grounds that the CMA’s decision was wrong or unreasonable and also provides protections so that appellants only incur the financial impacts of the CMA’s first instance decisions if and when an appeal court upholds them.
Clause 195 requires that a court order or a CMA final notice imposing a monetary penalty states certain critical information, such as key details about the recipient’s right of appeal.
Clause 196 provides that for the purposes of part 3, a person’s turnover includes the person’s worldwide turnover, as well as that of any persons who control or are controlled by the recipient of the penalty. The provision will enable the imposition of penalties large enough to be an effective disincentive. Those who direct wrongdoing, or benefit from the profits of wrongdoing, will be considered when deciding the level of penalties. The clause also gives the Secretary of State power to make regulations setting out methodologies for determining an entity’s turnover. That power allows the Secretary of State to set out the technical details that will facilitate the predictable and consistent functioning of the new regime. It will also make the regime more responsive to changes in corporate and accounting practices, ensuring that any changes to the reporting of turnover can be accommodated within updated regulations.
Clause 197 gives the Secretary of State the power to make regulations amending the maximum amounts for fixed and daily penalties imposable under this part of the Bill. Such regulations may not be made before the Secretary of State consults with relevant parties and will be subject to the affirmative procedure.
Clause 198 empowers the CMA to recover unpaid penalties, with interest, as a civil debt through the courts. The CMA will only be empowered to recover unpaid penalties once the period for bringing an appeal has expired and any appeal has been decided. The clause supports the functioning of the monetary penalties provisions, while also requiring the CMA to consider the effect of the recovery of a penalty on the enforcement subject’s ability to pay compensation.
Clause 199 provides for ancillary matters relating to the monetary penalty powers, such as interest, the effect of related court applications and appeals, payment by firms other than bodies corporate and where sums received from penalties must be paid. Essentially, the purpose of this clause is to provide important clarity on operational matters, to allow the new monetary penalty powers to function smoothly.

Seema Malhotra: Clause 191 requires the CMA to produce and publish a statement of policy regarding its powers to impose monetary penalties under this part. When the CMA decides on a penalty, it must take into account the statement. The Opposition strongly welcome the clause because it greatly increases the transparency of the monetary penalty system. It should ensure that there is clarity around the regime, thereby increasing its legitimacy. I would be grateful if the Minister will comment on the timeframe to which he expects the statement of policy to be published, whether it will follow a period of consultation, and where it will be published. Will it be publicly available, and will it be laid before this House?
Clause 192 introduces provisions giving the CMA a discretionary power to make the requirements of a final enforcement notice binding upon one or more members of the same interconnected corporate group, where the CMA considers it just, reasonable and proportionate  to do so. We welcome that common-sense addition to  the Bill. Clause 193 on record-keeping and reporting requirements introduces important transparency into the enforcement process. As such, we welcome its inclusion. It requires the CMA to keep a record of the undertakings that it has accepted, the enforcement directions that it has given, and reviews that it has carried out in relation to the effectiveness of such undertakings and directions.
Subsection (2) introduces provisions requiring the CMA to prepare a report for the Secretary of State on the effectiveness of undertakings and enforcement directions, and the number and outcome of appeals under clause 194. That again is important because it will enable the Government to continue to monitor the effectiveness of the new regime after Royal Assent. The question is whether it goes far enough. We have not tabled amendments to the clause. It is important to begin a discussion, which we will continue as we consider further parts of the Bill, about the reporting, and the transparency of how the measures are used in the CMA’s operations in practice.
Subsection (2) states:
“If requested to do so by the Secretary of State, the CMA must prepare a report on…the effectiveness of undertakings and…the number and outcome of appeals brought under section 194”,
yet we do not know what the Secretary of State might intend in relation to that. The wording implies that the report is not a duty on the CMA, but that the CMA has a duty to keep the information. If somebody deems that information to be in the public interest, or parliamentarians want to know what is happening under the regime, would they be required to undertake freedom of information requests? That does not seem appropriate. If the CMA collects that information, it ought to prepare a report to which Parliament has access.
It would be helpful for the Minister to inform the Committee what the Government intend in terms of report requests by the Secretary of State, and what information he would expect the CMA to share in relation to the regime, and the operation of some of the powers in the Bill. Does he agree that it would be in Parliament’s interest to have sight of that information? I would be grateful for his response on whether clause 193(2) should go further.
Clause 194 introduces provisions that would ensure that all appeals of CMA first-instance direct enforcement decisions are heard by the court. Under the clause, a person may appeal against a decision to impose a monetary penalty, the nature or amount of any such penalty and the giving of directions. We welcome the principle of the clause in allowing for a right of appeal. Again, we have questions on a timeframe for that and whether it will be part of the CMA’s consultations, as the Minister has alluded to, in relation to some of the operations of the regime.
Clause 195 sets out the information that must be included in an order made by the court, or a final notice given by the CMA, that includes a requirement to pay a monetary penalty. The information includes the amount  of the penalty, the grounds of the penalty, details such as when it is to be paid and so on. Subsections (3) and (4) additionally set a time limit of 14 days from when the order is imposed for enforcement subjects to apply to change the date or dates by which the penalty must be paid. We welcome the inclusion of the clause in the Bill.
Clause 196 introduces a definition of turnover into the bill for the purpose of calculating a penalty based on turnover. This appears to be a technical clause, specifically in the inclusion of turnover both in and outside the United Kingdom in applying the definition. Subsections (3) and (4) grant the Secretary of State delegated powers to make further regulations on how a person is to be treated as controlled by another person, and to make provision for determining the turnover of a person for the purposes of this part. I must ask the Minister: why is it that these further regulations have been left to secondary legislation and are not on the face of the Bill? I would be grateful if he could confirm and explain that, and also clarify why these powers are subject to the negative procedure rather than the affirmative. We have not sought to amend the clause, but we want to understand the reasons behind it so that we are confident that it should go forward unamended.
Clause 197 introduces a delegated power to the Secretary of State to make regulations to amend the maximum fixed penalties and daily penalties in this part. The regulations will be laid subject to the affirmative procedure, which we welcome. The explanatory notes state:
“The effect would be that any updated amounts specified by the Secretary of State will offset the erosion of the real value of the fixed maxima through inflation.”
That is important, particularly in the current context of spiralling inflation after the disastrous economic management of successive Governments over the last 13 years. Can the Minister provide any clarification on how regularly the amendments will be made? Will it be yearly, or more or less frequently? I would be grateful for the Minister’s confirmation of that, so that it is clear for the House and the CMA.
Under clause 198, “Recovery of monetary penalties”, when the deadline for an enforcement subject to make an appeal against a monetary penalty has expired, or when an appeal has been made and rejected, the CMA would be able to commence proceedings to recover the penalty and any unpaid interest as a civil debt. We welcome the clause and its detail as a necessary element of a new, more robust regime.
Clause 199 introduces provisions setting out further details regarding the payment of monetary penalties. It provides for interest at the statutory rate to be incurred on the balance if the penalty imposed is not paid by the deadline. In addition, it sets out how the penalty is not payable while an appeal application is ongoing. We welcome the clause, but I seek some assurance from the Minister that appeal applications will have a timeline, and will not lead to lengthy, protracted processes, and payments going unpaid because of them.

Kevin Hollinrake: I fear that I may have missed one or two of the hon. Lady’s points, but I think I got most of them. Guidance under clause 191 will be publicly consulted on, giving those potentially affected by it an opportunity  to comment directly. That consultation will happen post Royal Assent, and when finalised it will be published on the CMA’s website. On the Secretary of State requesting reports, clearly we do not know what we do not know. The Secretary of State has flexibility on when they might consider that a report is required under clause 193. The CMA already publishes regular impact assessments and other public reports, including its annual report to Parliament, and scrutiny will continue by traditional means, such as through Select Committees.

Seema Malhotra: The Minister will know that so much has gone to the Business and Trade Committee that there will be great concern about how frequently, and in what level of detail, it will be able to scrutinise all the work done under the regime. It will be a pretty tall order to do that job. I have a question for the Minister that I think is important. We have heard in previous debates about the frequency of reporting and what would be in the CMA’s report for all the new regimes and units that it will undertake. We obviously do not want to overload the CMA with unnecessary reporting, but there should be an expectation about what might be in the annual report, and there should be clarity on what the Secretary of State might expect in a report on the new regime.
Surely Ministers will want to have confidence in what is happening under the regime, and to have some data reported to them if the CMA is collecting it. Will  the Secretary of State expect a, perhaps annual, report on the new regime, perhaps for a few years, to know whether it is operating effectively? Secondly, will clause 193(2) give the Secretary of State the ability to request additional or more detailed reports if there are concerns about aspects of the regime’s implementation? I understand the power to ask for more reports, but not having any report requested through the course of the implementation of the operations strikes me as a serious gap, particularly—

Maria Miller: Order. Shall we get the Minister to reply?

Kevin Hollinrake: I thought that perhaps I had to intervene on the hon. Lady.

Seema Malhotra: Particularly in relation to the early implementation of the regime—I was on my last sentence.

Kevin Hollinrake: That was a very comprehensive intervention. I think that we are saying the same thing. Of course the CMA will continue to report annually, and of course we would expect it to report on the new powers that it has been granted through the Bill. In addition to that, the Bill gives the Secretary of State the power to request additional reports as he or she sees fit. We think that that achieves an appropriate balance. We do not think that it is right to get in the way of the CMA doing its job by obliging it to report on a more frequent basis. Of course, as part of my role, or my successor’s role if I move from this position back to the Back Benches or wherever, we regularly have meetings with the CMA to discuss its activities and where it is using its powers. Indeed, we write an annual letter to the CMA, which sets out where we expect its focus to lie.[Official Report, 20 July 2023, Vol. 736, c. 13MC.]
The hon. Lady asked a fair question about the appeals timelines. They will not be consulted on, but they will be subject to the civil procedure rules, and relevant rules in other UK jurisdictions. The civil procedure rules will be amended as part of the implementation of the provisions through the Civil Procedure Rule Committee in the usual way. Of course, we will want appeals to take place as expeditiously as possible, provided that they are fair.

Question put and agreed to.

Clause 191 accordingly ordered to stand part of the Bill.

Clauses 192 to 199 ordered to stand part of the Bill.

Clause 200 - Investigatory powers of enforcers

Question proposed, That the clause stand part of the Bill.

Maria Miller: With this it will be convenient to discuss that schedule 15 be the Fifteenth schedule to the Bill.

Kevin Hollinrake: Clause 200 introduces schedule 15 to the Bill, which contains amendments to schedule 5 to the Consumer Rights Act 2015, relating to the investigatory powers of consumer protection enforcers. Schedule 15 amends provisions in schedule 5 to the Consumer Rights Act to ensure the enforceability of statutory information notices given to a person under paragraph 14 of schedule 5.
The amendments made through schedule 15 come in two parts. First, we are providing the courts with a new power to impose a civil monetary penalty where the court finds there has been non-compliance, without reasonable excuse, with an information notice given by any consumer enforcer. Secondly, we are providing a new direct enforcement power for the CMA to decide whether an enforcement notice it has issued has been complied with and, if not, to impose a civil monetary penalty for any non-compliance without reasonable excuse.
The schedule also sets out the extraterritorial reach of enforcers’ power to request information by notice. We are legislating to ensure that enforcers can obtain all the necessary information from parties in and outside the UK to inform their analysis and ascertain breaches of the law, subject to certain conditions. The schedule also ensures that a warrant may be granted in relation to material that may be remotely stored in the cloud but still be accessible from the premises. I hope hon. Members agree that the schedule completes the largely successful modernisation of the investigatory powers of consumer law enforcers made by the Consumer Rights Act in 2015.

Seema Malhotra: Clause 200 introduces schedule 15 to the Bill, which amends schedule 5 of the Consumer Rights Act 2015, which in turn details the information-gathering powers available to consumer enforcers for the purposes of civil enforcement of consumer protection law. We support the clause, but I will make a few more remarks on schedule 15.
Schedule 15 makes limited amendments to schedule 5 of the Consumer Rights Act 2015 so that an enforcement notice would have to specify the circumstances in which  non-compliance with the enforcement notice could result in a financial penalty. The amendments would apply where an enforcer has given an information notice to a person and the enforcer considers that the respondent has, without reasonable excuse, failed to comply with the notice. In such circumstances, the enforcer would be able to make an application to the court.
The Opposition welcome the schedule, but there are questions related to those we have asked in relation to other clauses, specifically around the absence in the Bill of the updating of trading standards authorities’ powers for the digital economy and the 21st century. That is important. We have raised before the ability for trading standards to obtain information online and so on. Can the Minister have a look at that in more detail? In the course of further clauses next week, we may come on to some other amendments as well, but I would be grateful for the Minister’s response.

Kevin Hollinrake: It is our contention that trading standards do have the powers that they need to access information. There are concerns; I have concerns—I want to ensure that trading standards have sufficient powers in terms of take-down powers. That is something that we are looking at and, as the hon. Lady says, is probably something that we will discuss as the Bill proceeds.

Question put and agreed to.

Clause 200 accordingly ordered to stand part of the Bill.

Schedule 15 agreed to.

Clause 201 ordered to stand part of the Bill.

Clause 202 - Notices under this Part

Question proposed, That the clause stand part of the Bill.

Maria Miller: With this it will be convenient to discuss the following:
Clauses 203 to 207 stand part.
Government amendments 62 to 64.
That schedule 16 be the Sixteenth schedule to the Bill.
Clause 208 stand part.
Government amendment 65.
That schedule 17 be the Seventeenth schedule to the Bill.
Clauses 209 to 215 stand part.

Kevin Hollinrake: Clause 202 provides for the practicalities of giving notices. It sets out the permissible means for the CMA and other enforcers to give a notice: by delivering it to the person; by leaving it at the person’s address; by post; or by email.
Clause 203 empowers the CMA to make rules about procedural and other matters in connection with its direct enforcement functions. This clause expressly permits the CMA to delegate decision making for its direct enforcement functions to its board, panel and/or staff. The clause provides the CMA with a vital tool with which it can establish the technical details of a robust  and predictable direct enforcement process that will achieve the stronger enforcement that we need without compromising fair process or certainty for traders.
Clause 204 requires that the CMA’s rules must be publicly consulted on, and given the approval of the Secretary of State through regulations, before coming into force. Public consultation will ensure that the views of all stakeholders, including consumer groups and traders, are adequately considered as rules are prepared. The Secretary of State also has the ongoing power to vary or revoke rules, which will ensure that the wider needs of the economy continue to be reflected in the operation of the direct enforcement regime. This clause ensures that the CMA’s discretion to make technical rules governing its direct enforcement functions is exercised in a balanced way that serves the needs of the economy.
Clause 205 requires the CMA to prepare and publish guidance about its general approach to the carrying out of its direct enforcement functions, and to keep under review the guidance, which it may update from time to time. The CMA is required to publicly consult, and obtain the Secretary of State’s approval, before issuing its first guidance.
Clause 206 provides that, for the purposes of the law of defamation, absolute privilege applies to anything done by the CMA in the exercise of its direct enforcement functions. There are strong precedents for that approach: judicial or tribunal proceedings are protected from defamation. There is also protection from defamation for the CMA’s direct enforcement regime for competition law and its merger and market investigation powers. Those suspected of infringing are not unfairly prejudiced by this clause, which merely reflects the long-standing principle that the exercise of regulatory and judicial functions should not give rise to defamation claims.
Clause 207 formally introduces schedule 16 and its contents within the body of the Bill. Schedule 16 makes numerous minor and consequential amendments to other legislation. This schedule is important to provide for the smooth functioning of the enforcement regimes and to ensure legislative consistency.
Government amendments 62 and 63 add a reference to chapters 3 and 4 of part 3 of the Bill to schedule 14 to the Enterprise Act 2002. These amendments will ensure legislative consistency.
Government amendment 64 is a consequential amendment. It includes part 4 of the Bill in the list of enactments in respect of which investigatory powers under schedule 5 to the Consumer Rights Act 2015 are conferred.
Clause 208 introduces schedule 17, which makes transitional and saving provision in relation to the court-based and CMA direct enforcement regimes. Schedule 17 provides for the general rule that the new law will apply to conduct that takes place on or after the commencement date of chapters 3 and 4 of part 3 of the Bill. Conversely, as a general rule, the “old law”—that is, part 8 of the Enterprise Act 2002 and related provisions—will continue to apply to conduct that takes place before the commencement date of chapters 3 and 4 in part 3 of  the Bill.
Schedule 17 also makes specific rules for continuing conduct that is essentially an act or omission that starts before the new law has commenced but is repeated or continues after the new law’s commencement. In such a  scenario, as well as applying to the post-commencement conduct, the new law will apply to the pre-commencement conduct for the purpose of enabling enforcement action under part 3 of the Bill.
However, no requirements or penalties can be imposed on a person for the pre-commencement parts of the continuing conduct, unless such a requirement is already imposable under part 8 of the Enterprise Act 2002. Similarly, the court and the CMA will not be able to use their new powers to impose penalties for breaches of any undertakings given under part 8 of the 2002 Act.
Government amendment 65 specifies that schedule 5 to the Consumer Rights Act 2015, as it has effect before the commencement of the Bill, is a provision related to part 8 of the 2002 Act. Clause 209 sets out how
“supply of goods or digital content”
should be interpreted. It makes it clear that for the purposes of this part of the Bill, supplying goods and digital content includes seeking to supply goods and digital content.
Clause 210 sets out how “supply of services” should be interpreted. It provides that the act of supplying or receiving services is not necessary to bring a person within scope of the Bill. Seeking to do so will satisfy references in the Bill to a person who supplies or receives goods or digital content. The clause also clarifies that the supply of services includes the broad category of
“performing for gain or reward any activity other than the supply of goods or digital content”.
That provision helps to ensure that the part 3 enforcement regimes have a sufficiently wide application in relation to services.
Clause 211 provides that accessories to an infringing commercial practice engaged in by a body corporate can be subject to enforcement action. This clause and clause 212 replace section 222 in part 8 of the Enterprise Act 2002. Clause 211 also sets out the conditions that must be satisfied for a person to be an accessory to a past or ongoing commercial practice by a body corporate. Where the infringer is a body corporate, an accessory to the infringing practice is a person who has a special relationship with the infringer and has consented or connived in the commercial practice. Enforcement against accessories is essential to facilitate enforcement against bodies with complex corporate structures and where directors, shareholders or other bodies corporate may direct or influence infringing practices.
Clause 212 defines what is meant by “special relationship” in the context of the preceding clause. A person has a special relationship with a body corporate in two scenarios: where they are a controller of the body corporate; or where they are an officer of the body corporate, such as a director, manager, secretary or similar, or where they purport to act in such a capacity. Taken as a whole, these detailed provisions reflect the starting position that those who either direct or influence the commission of infringing practices should be held liable for them.
Clause 213 defines enhanced consumer measures, or ECMs. The clause provides that there are three types of ECM: first, redress measures, which require payment  of compensation or the making of some other form of redress; secondly, compliance measures, which require  the taking of steps to prevent or reduce the risk of future infringement; and, thirdly, choice measures, which are intended to facilitate effective consumer choice. The clause establishes a common threshold for when redress measures can be used—namely, where affected consumers have suffered loss as a result of the infringing conduct or where they have been affected in any other way by the conduct. The result is that redress measures are not limited to consumers who have suffered a financial loss.
Clause 214 gives definitions or interpretative guidance for those words and terms. Many of the definitions are self-explanatory, but I draw hon. Members’ attention to the definition of “business”. The definition is non-exhaustive and widely drawn to capture any kind of gain or reward. As under the existing definition of “business” under part 8 of the Enterprise Act 2002, monetary payment is not a prerequisite, and so for example a service carried out in exchange for the consumer’s data or for reputational advantage would also qualify. The Government’s intent is to give part 3 of the Bill a wide scope, so that any infringing commercial practice that harms the collective interests of consumers may be enforced against.
Clause 215 acts as an interpretation aid. It lists certain important or technical words and expressions used in part 3 and refers the reader to the clause that defines or gives guidance on the interpretation of said word or expression.
I hope that the Committee accepts Government amendments 62 to 65, and I commend clauses 202 to 215 and schedules 16 and 17 to the Committee.

Seema Malhotra: Clause 202 sets out the process for giving notices under part 3 to persons within and outside of the UK, including business entities registered or operating outside the UK. It defines acceptable means of service and the meaning of a recipient’s proper address. We welcome the clause.
Clause 203 allows the CMA to make rules, subject to approval by the Secretary of State through secondary legislation, to set out the procedural administrative details of the CMA’s enforcement regime. The rules supplement the framework provided in chapter 4 of part 3. We welcome the clause and the clarification, and also the important points made in the explanatory notes, including the point that the rules will cover “arrangements for complaints’ handling”. The clause is a common-sense provision.
Clause 204 sets out the process for the exercise of the rule-making power under clause 203. We welcome the fact that the CMA will be required to consult with stakeholders during the preparation of the rules, and we discussed that in relation to earlier clauses. The CMA will also be required to obtain the Secretary of State’s approval before bringing any rule into operation or varying a rule. We welcome that measure too.
Under 204(5), the Secretary of State will be empowered to vary or revoke rules or to direct the CMA to vary or revoke rules, and regulations made under the clause will be subject to the negative parliamentary procedure. Although we welcome the clause, will the Minister clarify why that has been left to the negative procedure? The inclusion of affirmative and negative procedures in the Bill seems to be slightly random, so I would be grateful for that clarification.
Under clause 205, the CMA will be required to prepare and publish guidance about its general approach to carrying out its direct enforcement functions. The guidance will provide more detailed information to traders and other stakeholders about how the direct enforcement regime would work in practice. The Opposition welcome the clause because it introduces more transparency and clarity into the regime, but will the Minister tell the Committee what timeframe is considered appropriate for the publication of the guidance? He said that he saw publication happening after Royal Assent, but does he expect it to happen within a certain period of time? I am sure that he wants the legislation to be implemented as soon as possible, as do I.
Clause 206 would protect the CMA against actions for defamation as a result of the exercise of functions under part 3. We welcome the clause. It is important that the CMA is protected in carrying out its job as the co-ordinating enforcement authority.
Clause 207 introduces schedule 16, which contains minor and consequential amendment in relation to part 3. We support schedule 16 and do not consider the consequential amendments contentious. We also support Government amendments 62 and 63.
Clause 208 introduces schedule 17, which provides transitional and saving provisions in connection with part 3. Those provisions concern the operation of the new law introduced by chapter 3 and CMA direct enforcement powers under chapter 4 of part 3. They also relate to the operation of the old law, which constitutes part 8 of the Enterprise Act 2002. It lays out how the new law would apply to conduct that takes place on or after the commencement date of the Bill, and to conduct of concern that a person is likely to engage in, where such conduct is likely to take place on or after the commencement date. The old law would continue to apply to conduct that takes place before the commencement date, as well as to various other forms of conduct. We welcome this technical schedule and clarification, and we support amendment 65.
Clause 209 introduces definitions for references to supply of goods or digital content as used across part 3 and we support the clause. Clause 210 defines how references to the supply of services should be construed across part 3 and we support the clause. Clause 211 defines what is meant by an accessory to the commercial practice of a body corporate. Will the Minister clarify whether he is confident the clause adequately captures anyone who may act as an accessory and how the definition was brought together? Was it through consultation? That will provide full clarity on what constitutes an accessory.
Clause 212 defines what constitutes having a special relationship with a body corporate, covering two scenarios outlined by the Minister. As such, we support its inclusion in the Bill. Clause 213 defines three types of enhanced consumer measures, referred to as redress, compliance and choice measures. I am grateful to the Minister for outlining some detail on that and the definitions, so that those set out in subsections (2) to (4) are straightforward and clear, and that that also applies to their interpretation by consumers. We thus welcome the clause’s inclusion in the Bill.
Clause 214 defines other terms for the purposes of this part, including the definitions of “businesses”, “goods”, “enforcement orders”, “subsidiary” and “supply”, which are important, and we support their inclusion. Further, clause 215 sets out an index of defined expressions and we welcome and support it.

Kevin Hollinrake: I will make a couple of points, the first of which is on the negative procedure. On regulations, there is a combination in clause 204 of public consultation followed by review by the Secretary of State, which will allow for a significant level of scrutiny. On that basis, we feel the negative procedure is justified and appropriate.
On the guidance, the CMA must undertake several actions, including a public consultation on the practices. This may take some time, and we expect that the guidance may be ready by autumn 2024, but that will depend upon a number of factors. We clearly want it in place as quickly as possible, but we must ensure that it is fit for purpose.
The definition of “accessory” in clause 211 is consistent with, and restates with minor clarifications, the current definition in part 8 of the Enterprise Act 2002.

Question put and agreed to.

Clause 202 accordingly ordered to stand part of the Bill.

Clauses 203 to 207 ordered to stand part of the Bill.

Schedule 16 - Part 3: minor and consequential amendments

Amendments made: 62, in schedule 16, page 329, line 17, leave out sub-paragraph (b).
See explanatory statement for Amendment 63.
Amendment 63, in schedule 16, page 329, line 23, at end insert—
“5A In Schedule 14
(provisions about disclosure of information) at the appropriate place
insert—
‘Chapters
3 and 4 of Part 3 of the Digital Markets, Competition and Consumers Act
2023.’”.
This amendment, which is made for drafting consistency, inserts a reference to Chapters 3 and 4 of Part 3 of the Bill into Schedule 14 to the Enterprise Act 2002 instead of achieving the same effect by adding that reference into section 238(1) of that Act.
Amendment 64, in schedule 16, page 337, line 2, at end insert—
“Part 4 of the
Digital Markets, Competition and Consumers Act
2023.”.—
This amendment adds Part 4 of the Bill to the list of enactments in the new paragraph 20A of Schedule 5 to the Consumer Rights Act 2015 (inserted by paragraph 8(10) of Schedule 16), with the effect that authorised enforcers will be able to exercise the investigatory powers conferred by Part 4 of Schedule 5 to CRA 2015 in connection with infringements of Part 4 of the Bill.

Schedule 16, as amended, agreed to.

Clause 208 ordered to stand part of the Bill.

Schedule 17 - Part 3: transitional and saving provisions in relation to Part 3

Amendment made: 65, in schedule 17, page 338, line 1, leave out from “means” to end of line 11 and insert “—
(a) Part 8 of EA 2002, as
that Part had effect immediately before the commencement date,
and
(b) any provisions of law
(including in particular Schedule 5 to CRA 2015) relating to
Part 8 of EA 2002, as  those provisions had effect immediately
before the commencement date.”.—
This amendment clarifies that the definition of “the old law” for the purposes of the transitional provisions in Schedule 17 to the Bill includes Schedule 5 to the Consumer Rights Act 2015 (which confers investigatory powers on enforcers).

Schedule 17, as amended, agreed to.

Clauses 209 to 215 ordered to stand part of the Bill.

Ordered,
That the Order of the Committee of 13 June be varied by the omission from paragraph 1(f) of “and 2.00 pm”.—(Mike Wood.)

Ordered, That further consideration be now adjourned. —(Mike Wood.)

Adjourned till Tuesday 4 July at twenty-five minutes past Nine o’clock.

Written evidence reported to the House

DMCCB42 Authors’ Licensing and Collecting Society ALS
DMCCB43 Beer52 Limited
DMCCB44 Shoosmiths LLP
DMCCB45 Amazon